Multiple Choice
A common stock currently has a beta of 1.7, the risk-free rate is 7 percent annually, and the market return is 12 percent annually. The stock is expected to generate per-share benefits of $6.70 during the coming period. A pending lawsuit has just been dismissed and the beta of the stock drops to1.4. The new equilibrium price of the stock__________ .
A) will be $47.86
B) will be $55.83
C) will be $43.23
D) cannot be determined from the information given
Correct Answer:
Verified
Correct Answer:
Verified
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